News / Asia

India Struggles to Bridge Economic Gap

A homeless Indian woman begs on a bridge in Mumbai (file photo)
A homeless Indian woman begs on a bridge in Mumbai (file photo)
Anjana Pasricha

Two decades ago, India opened up its tightly regulated economy, unleashing a wave of reforms that transformed the country and put it in the league of the world's fastest growing economies. But many consider the job only partially complete and say the South Asian country needs to bridge the gap between a prosperous middle class and the millions of people who still grapple with poverty.

Dramatic shift

Rajeev Nanda, a software professional, was among a wave of young people who migrated to the United States in the 1980s, because of a lack of job opportunities at home. In 2001, a decade after India opened its socialist-style economy, he returned to establish an office in Bangalore for the U.S.-based company that employed him.

Nanda found a country dramatically different from the one he had left 12 years before.

“When we went, it was a one-way ticket [to the U.S.," explained Nanda. "Then the economy opened up. The opportunities created a different mindset. Suddenly there was a lot of hope and lot of excitement in the air.”

Financial woes

The liberalization drive launched in 1991 came at a time when India was confronting a crisis. It was on the verge of defaulting on its international debt.

Manmohan Singh (file photo)
Manmohan Singh (file photo)

Prime Minister Manmohan Singh - then the country’s finance minister - lifted restrictions on foreign investors, relaxed stifling controls on domestic industry and slashed taxes.

The results were soon evident. India’s economy became the world’s second fastest-growing economy, after China. Led by a thriving information-technology sector, the services sector boomed. Manufacturing industries expanded. Exports flourished. A huge middle class emerged.

Economic boom

The head of the Federation of Indian Chambers of Commerce and Industry, Rajiv Kumar, says the unshackling of the private sector created the economic boom.

“The most important thing in my view is to have freed the Indian entrepreneurial spirit, which is its traditional strength. It had been chained and caged prior to 1991 in the ideology of central planning and socialism etc,” Kumar said.

But, 20 years later, analysts say India’s economic revolution is only partially complete. And, some people worry that it is running out of steam.

For years, investors have waited for a second wave of reforms to open up sectors which are still tightly regulated, such as retail and insurance. Businesses grapple with lack of infrastructure, as everything from power generation to the transportation network falls short. Several Indian companies are investing overseas, rather than at home where they are deterred by problems such as acquiring land for factories.

Unequal growth

But economists say even more pressing is the problem of unequal growth. While one half of the country prospers, the other half continues to grapple with poverty. In the cities, swank, gated residential complexes and gleaming shopping malls contrast with sprawling urban slums.

Poverty is rampant in many backward, rural regions. A little more than 40 percent of the people - about 450 million - live on less than $2 a day.

P. Chidambaram (file photo)
P. Chidambaram (file photo)

Top Indian officials are confident the problem can be addressed by even faster growth. Among them is Home Minister P. Chidambaram, who was formerly finance minister.

“Our biggest failure is that the pace of reduction of poverty has not been fast enough, that the growth of employment has not been fast enough," Chidambaram said. "The pace of reduction of poverty must pick up and that can only happen if growth averages over eight percent and is sustained at nine percent for several years.”

But there are worries that brisk economic growth may not be enough to address problems such as lack of access to schooling and health care for millions of Indians. Rates of malnourishment and infant mortality are among the worst in the world. Millions of children are still unschooled.

Effective governance

A top Indian economist, Swaminathan Aiyar, blames lack of effective governance for such problems.

“It is not enough to say there is some economic growth. I mean what is the condition of your schools? What is the condition of your public health? What is the condition of government services in general? That is the biggest problem that is crying out,” noted Aiyar.

Analysts also say that, in the past year, economic issues have been put on the back burner as the government focuses its energies on fighting allegations of huge official corruption. They say this has led to a policy paralysis in the government.

New focus

Minister Chidambaram says the country needs to put the focus back on the economy to realize its full potential.

“The center stage must once again be restored to growth, to change, to reforms, better governance. So the blips you see today in declining investment or more foreign outward investment, all these can be resolved…..and then outpace even China, that’s not impossible, people are beginning to talk about outpacing China,”  Chidambaram said.

Rajeev Nanda says that, two decades after liberalization, most professionals would rather stay in India than migrate to Western countries.

“In the last few years, I have seen even a reverse, where people do not want to go. They are simply having a better life, better opportunities right here,” Nanda said.

Economists say the challenge in the coming years will be to bridge the gap between the middle class and the poor, so that those living now in urban slums and the countryside can echo the same sentiment.

You May Like

Lesotho Faces New Round of Violence, Political Crisis

Brutal killing of military officer has sent former leaders back into S. Africa where they're watching anxiously as regional officials head in to try to restore peace More

Video US Diplomat Expects Adoption of Bosnian Massacre Anniversary Resolution

Samantha Power says there's broad consensus about killings in Bosnia's war, but Russia calls resolution 'divisive,' backs UN countermeasure More

America's Most Exotic Presidential Pets

From alligators to bears, the White House has been home to some unusual presidential pets over the years More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Making Music, Fleeing Bombs: New Film on Sudan’s Internal Refugeesi
X
Carolyn Weaver
July 06, 2015 6:47 PM
In 2012, Sudanese filmmaker Hajooj Kuka went to make a documentary among civil war refugees in Sudan’s Blue Nile and Nuba Mountains region. What he found surprised him: music was helping to save people from bombing raids by their own government. VOA’s Carolyn Weaver has more.
Video

Video Making Music, Fleeing Bombs: New Film on Sudan’s Internal Refugees

In 2012, Sudanese filmmaker Hajooj Kuka went to make a documentary among civil war refugees in Sudan’s Blue Nile and Nuba Mountains region. What he found surprised him: music was helping to save people from bombing raids by their own government. VOA’s Carolyn Weaver has more.
Video

Video Rice Farmers Frustrated As Drought Grips Thailand

A severe drought in Thailand is limiting the growing season of the country’s important rice crop. Farmers are blaming the government for not doing more to protect a key export. Steve Sandford reports from Chiang Mai, Thailand.
Video

Video 'From This Day Forward' Reveals Difficult Journey of Transgender Parent

In her documentary, "From This Day Forward", filmmaker Sharon Shattuck reveals the personal journey of her transgender father, as he told his family that he always felt he was a woman inside and decided to live as one. VOA’s Penelope Poulou has more.
Video

Video Floodwaters Threaten Iconic American Home

The Farnsworth House in the Midwest State of Illinois is one of the most iconic homes in America. Thousands of tourists visit the site every year. Its location near a river inspired the design of the house, but, as VOA’s Kane Farabaugh reports, that very location is now threatening the existence of this National Historic Landmark.
Video

Video Olympics Construction Scars Sacred Korean Mountain

Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Xenophobia Victims in South Africa Flee Violence, Then Return

Many Malawians fled South Africa early this year after xenophobic attacks on African immigrants. But many quickly found life was no better at home and have returned to South Africa – often illegally and without jobs, and facing the tough task of having to start over. Lameck Masina and Anita Powell file from Johannesburg.
Video

Video Family of American Marine Calls for Release From Iranian Prison

As the crowd of journalists covering the Iran talks swells, so too do the opportunities for media coverage.  Hoping to catch the attention of high-level diplomats, the family of American-Iranian marine Amir Hekmati is in Vienna, pleading for his release from an Iranian prison after nearly 4 years.  VOA’s Heather Murdock reports from Vienna.
Video

Video UK Holds Terror Drill as MPs Mull Tunisia Response

After pledging a tough response to last Friday’s terror attack in Tunisia, which came just days before the 10th anniversary of the bomb attacks on London’s transport network, British security services are shifting their focus to overseas counter-terror operations. VOA's Henry Ridgwell has more.
Video

Video Obama on Cuba: This is What Change Looks Like

President Barack Obama says the United States will soon reopen its embassy in Cuba for the first time since 1961, ending a half-century of isolation. VOA White House correspondent Luis Ramirez reports.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.

VOA Blogs